After 20 years of not paying its debts, Zimbabwe is taking steps to clean up its balance sheet and its image by making payments to major creditors.
Even if admittedly token amounts, the government hopes they will build goodwill towards Zimbabwe.
Finance Minister Mthuli Ncube announced during a video conference this month that Zimbabwe had made its first payments in two decades to a group of rich countries known as the Paris Club.
“We have started paying them because, as a country, we ought to be known as good debtors and not bad debtors,” Ncube said.
In addition to the first payments in two decades to the 17 nations that are part of the Paris Club, he said Zimbabwe was also settling its debts to multilateral lenders.
“We have taken the step of beginning to pay token payments to the World Bank, the African Development Bank and the European Investment Bank,” Ncube said.
Clearing Zimbabwe’s debts, or simply catching up on payments, is a mammoth task.
The US$11 billion that Zimbabwe owes to foreign lenders amounts to about 71 percent of the country’s GDP. Some US$6.5 billion of the total is payments that are in arrears.
Ncube said the government would need a “sponsor” to bring its debt payments under control.
It was unclear what exactly he meant by that, but he said the goal was “really to tackle those arrears with the World Bank and the African Development Bank, the preferred creditors”.
“We are working hard on that,” he said.
Zimbabwe defaulted on its debts when the economy fell into a tailspin 20 years ago under then-president Robert Mugabe.
President Emmerson Mnangagwa, who took power after a coup in 2017, wants to renew ties with Europe and the United States, which had largely cut them over Mugabe’s undermining of elections and human rights abuses.
“The country seeks to re-engage with the international community in Europe and the US,” economist Persistence Gwanyanya said. The debt payments “are positive actions that will convince the rest of the world that we mean what we say”.
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